We know now that the UK has been successful in persuading Jersey, Guernsey and the Isle of Man to sign what many call 'son of FATCA' agreements because they basically replicate the deal the USA has demanded from these countries under the Foreign Accounts Tax Compliance Act in that country.

The UK has also said it intends to now impose (there's no other word for it) these agreements on places like Cayman and the British Virgin Islands.

Now, let me offer some speculation, which is this. The UK has imposed this demand on these places. But it is also wholly responsible for their foreign relations (they are not sovereign states: we represent them even if a little game of charades is played on the issue). So if the UK now secures this information and the UK has 'most favoured nation' agreements with all EU 27 countries and a lot of others besides then doesn't the UK now have a legal obligation to make sure that the Crown Dependencies and all the Overseas Territories that sign with the UK offer exactly the same deal that we have now secured to all our most favoured nation partners? That's what such status means: we can afford them no less a privilege than we enjoy. So if we enjoy such agreements so must they if they ask.

I may be wrong on this: I stress, this is speculation. But I think if I was Germany, France, Greece and other countries with an interest in tax evasion in which the UK's tax havens play a part then I would be investing the time in investigating this right now and would be sending my demand to Whitehall (which we now know has the power to impose such deals) pretty soon.

The UK's tax havens need watch it: I think very real change may come sooner than they expect and have a happy knack of being right on these things. That doesn't guarantee I am this time, but it would be good if I was.

10 Responses to “Will Jersey, Guernsey and the Isle of Man have to give FATCA to the EU – and beyond?”

Apart from the hassle and cost of compliance through the supply of negligible amounts of information, I doubt that Guernsey, Jersey or the Isle of Man would be in the slightest but bothered about entering into agreements with the other EU countries. Mainland Europe is not and never has been an important market for the Crown Dependencies.

Why is this? Luxembourg, Switzerland, Austria and Monaco cater for mainland Europeans from a banking perspective. Luxembourg takes care of funds, and the Europeans simply don’t understand trusts so prefer to use continental foundations. For companies again they use Luxembourg and Liechtenstein. We can’t provide them with anything that they can’t already get within a 2-hour car drive.

I doubt the mainland EU countries would be remotely interested but, if they are, then go for it. Give it to them. Its a complete non-issue for the Crown Dependencies.

I think you’re not quite right on this, as the crown dependencies are technically third countries under EU EOI. However, what seems to be lost so far on the UK is that it could invoke most favoured nation provisions on any EU nation that enters into a Model 1 IGA with the US – Ireland for example. Why isn’t the UK seeking a similar agreement with Ireland?

Once there is full transparency I presume there will be no objection to finance continuing in the crown dependencies?
I imagine placing your funds with professional, well qualified and regulated staff may be slightly better than than call centres when English might not be the first language.
Having worked for 30 years in Jersey, nearly have of which have been in compliance I have no concerns about the vast majority of remaining funds being able to be identified. My current employer requires all relationships to be tax compliant – full disclosure with the clients home tax office already occurs with the clients permission.
I really have no idea where a billion pounds is going to be found between the islands – I rarely come across any European or Americas clients other than those who take up that nationality when they move away from their country.